ITEM:PUBLIC HEARINGS

17.CONSIDER
FIRST READING OF ORDINANCE NO. 106—REVISING FEES FOR WATER DISTRIBUTION SYSTEM
AND OTHER PERMITS

Meeting Date:January 30,
2003Budgeted: N/A

Program/Line
Item No.:N/A

Staff
Contact:Henrietta SternCost Estimate:
$80,000/year (estimate)

General Counsel Approval:
Reviewed initial ordinance text and concurred; has not reviewed text changes
and Notice of Exemption as of January 24, 2003.

Committee Recommendation: The
Administrative Committee reviewed this item at its January 21, 2003 meeting and
suggested clarifications and refinements that are reflected in the proposed
ordinance, version 1.3.

SUMMARY:The Board will consider the first reading of
Ordinance No. 106 (version 1.3 dated January 21, 2003), provided as Exhibit 17-A.Ordinance No. 106 amends Rule 60 of the MPWMD
Rules and Regulations that governs fees charged for District permits.Development of this ordinance stems from
Board direction on December 16, 2002 to update the fee structure for processing
water distribution system permit applications so that the fees more closely
match actual expenses.The proposed
ordinance also makes refinements to the modest fees associated with river work
permits, and updates the rate per hour to be charged for MPWMD staff time for
all permits.Please refer to the
“Discussion” section below for more details on specific changes.

RECOMMENDED
ACTION:District staff recommends
that the Board:

ØApprove the first reading of Ordinance No. 106
and set a second reading for the February 27, 2003 meeting;

ØAuthorize District staff to file a Notice of
Exemption for Ordinance No. 106 (Exhibit 17-B)
in compliance with California Environmental Quality Act (CEQA).Ordinance No. 106 is not considered a
“project” under CEQA because it is solely financial in nature, and would not
result in a physical effect to the environment.

The Administrative Committee
reviewed the January 10, 2003 draft of the ordinance (version 1.2) and
suggested text refinements so that the fee schedule and payment process is more
clear. Language was added to ensure that direct costs associated with permit
processing (such as filings with the County Clerk) are paid by the applicant.The text was also changed to show that there
is no sunset date for permit fees.These
changes are incorporated into the version 1.3 text shown as Exhibit 17-A and/or will be incorporated
into revised Implementation Guidelines for water distribution system regulation
that reflect Ordinance No. 105 and 106.

BACKGROUND:Ordinance No. 96, approved by the District
Board in March 2001 (effective April 18, 2001) included adjustments to MPWMD
fees for water distribution system permits. Additional fee increases and a fee
implementation plan were approved by the Board as part of the December 16, 2002
discussion on Ordinance No. 105, which expanded regulatory activities for water
distribution systems.After the December
2002 meeting, District Counsel advised District staff that changes to the fees
must be done via ordinance.To that end,
Ordinance No. 106 was developed.In the
course of ordinance preparation, other fees discussed under Rule 60 were
reviewed.

DISCUSSION:Applicants are currently charged $1,400 when
submitting an application to create or amend a water distribution system, which
covers 20 hours of District staff time.If the application takes more than 20 hours to process, applicants are
charged for staff time at a rate of $70 per hour for the twenty-first and
subsequent hours.Applicants are not
charged for any consultations prior to submitting a written application,
including meetings, water rights reviews, telephone assistance and related
information.There is currently no
charge for District Counsel’s time or for direct costs incurred.There is no refund if the application takes
less than 20 hours (to date, all applications have taken at least 20 hours).

Actual costs to the District in
terms of staff time are consistently greater than revenues from permit
fees.More importantly, no compensation
occurs for the time required by District Counsel to review water rights
information and staff work products, attend public hearings for the applications,
provide CEQA oversight, and answer legal questions that arise during
discussions with applicants.

Ordinance No. 106 is based on the
funding implementation plan contained in the December 16, 2002 board packet,
with some minor refinements.The
Ordinance 106 text focuses on specific fees; the Implementation Guidelines will
provide more details about process and staff implementation, as follows:

ØNo charge for first hour of telephone,
e-mail or in-person assistance.This
covers the bulk of general questions.

ØDeposit of $560 for any consultation after
the first hour.This deposit covers
up to eight hours of staff time for meetings to help the applicant go through
application form in detail and other activities prior to submitting a formal
written application.The applicant must
sign a statement acknowledging that he/she will pay for costs that exceed $560
as the application process continues, or the process will be terminated.Unused deposit money will be returned if the
application does not go forward.If a
formal written application is submitted, the remaining funds from the $560
deposit will be applied to the application fee.

ØApplication fee of $2,450 when a written
application is submitted.This is
about $1,000 more than the current $1,400 fee, and is based on 35 hours of
cumulative staff time for each application at $70 per hour, and does not
include legal time.District staff time
will be tracked for each application, and documentation will be provided to the
applicant.A refund would be provided if
total staff time does not exceed the $2,450 amount.

ØDeposit for unusually complex applications
refer to applications that exceed 35 staff hours in order to process.Upon reaching the 35th staff hour,
the General Manager will make a determination about the expected number of
District staff hours needed to complete the application process, based on the
progress of the application to date and what additional steps are yet to be
completed.A deposit for the estimated
number of hours needed to complete the process will be required in order to
continue the process, based on a rate of $70 per hour.

ØLegal Fees Separately Invoiced.Counsel will separately track his/her time
for each applicant (including pre-application consultation) and provide a total
as part of the fee documentation.The
applicant must pay for legal fees before the permit is issued.

ØDirect Costs.The applicant will pay for direct costs
incurred by the District, such as filing fees and public hearing notices.

Other Changes:In general, Ordinance No. 105 changes Rule 60 so that hourly staff time
is charged at a rate of $70 per hour.This number is derived from a rough weighted consolidation of the actual
costs of staff associated with permit issuance, from “front counter” employees
to the General Manager.

Staff also reviewed existing fees for river work permits,
which currently range from $10 to $25 each.The recommended new fees range from $25 to $50 for each permit.These fees often do not reflect the true cost
of staff time, but are kept low as an incentive to encourage public
participation and coordination with the District river restoration
programs.One exception is charging the
standard staff rate of $70 per hour as well as direct costs incurred for river
work permits that take more than five hours of staff time due to their
complexity.

The Administrative Committee also suggested that
implementation guidelines be updated for Rule 60-B, C, D, H and I, which
reflect water connection permits, water credits and other functions of the
Water Demand Division.The Committee
recognized that a separate process and possible ordinance in the future would
be the best means to address appropriate fees for these functions, including
whether Rule 60-H (fees for water credit transfers) should remain.

IMPACT ON RESOURCES: Ordinance No. 106 will help
offset the true cost of permit application processing by generating additional
revenues so that the program can be more fiscally balanced.At the December 16, 2002 Board meeting, the
annual cost of implementing the water distribution system permit program was
estimated at $80,000 per year.

The Fiscal Year 2002-2003 budget
is being amended to include funds to implement Ordinance No. 105 (see agenda
item 17); an amount of $51,000 is budgeted for consultant assistance (see
agenda item 3).